Strategy Execution: From Powerpoint to Practice - the performance ...

Strategy Execution: From Powerpoint to Practice

“A strategy, even a great one, doesn’t implement itself ” Seminar Ekonomika Alumni KULeuven | 03.12.2009 | Jeroen De Flander

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From PowerPoint to Practice > Material

This presentation and a free summary research report are available on Linked|SE, the official Strategy Execution Group on LinkedIn Select “Search Groups” and type “Strategy Execution”

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From PowerPoint to Practice > Agenda

Agenda

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The execution challenge

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The Strategy Execution formula

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12 insights from the best-in-class

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Strategy Execution Heroes

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Strategy Execution Barometer®

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Questions & Answers

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Agenda

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Questions & Answers

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From PowerPoint to Practice > Challenge

The execution challenge - 3 crucial questions every managers should ask

“Did you know that companies loose between 40 to 60% of their strategy during implementation?“

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“Do I know exactly where my company, department or team is losing performance?”

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What can I do to close the execution gap?

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The execution challenge – experts and senior executives join forces Experts Dr. Peter Scott-Morgan Sir John Whitmore Volker Voigt Prof. Vincent Lion Koen Schreurs

Senior Executives Michael Smith VP Group Strategy Coca-Cola Shane Dempsey VP HR & Comm. Novo Nordisk Douglas Johnson-Poensgen VP Business Development BT Alan Maxwell VP HR Lockheed Martin Jean-Francois Van Kerckhove VP Corporate Strategy eBay Hervé Borensztejn Sr VP HR EADS

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The execution challenge – our contribution Actionable, up-to-date benchmark information

250+ useful implementation tips

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Questions & Answers

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From PowerPoint to Practice > Formula

The Strategy Execution Formula: Framework + Heroes = Performance Framework

Heroes

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From PowerPoint to Practice > Formula

The 8


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Questions & Answers

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From PowerPoint to Practice > Insights

Insight 1: Strategy Execution is a discipline of its own

Involves everyone Takes much longer Demands short- and long-term thinking Requires a specific skills set

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Insight 2: Strategy Execution is a vast area with blurred borders

Several processes All functional domains Across departments Local and global

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Insight 3: Strategy Execution is on its way to maturity

Universities Companies Google Books

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Insight 4: Strategy Execution requires a great strategy

Rubbish in, rubbish out Man and woman Mars and Venus And/or

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Insight 5: Strategy Execution requires your attention from the start

Existing culture Existing power structures Ability to change Maturity of the execution process Maturity of the execution skills

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Insight 6: Strategy Execution has a strong timing sequence

Cascade Deadlines Triggers Repeat button

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Insight 7: Strategy Execution requests a seamless integration between organisational and individual performance

Different perspectives Different roles Connect Build an 8

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Insight 8: Strategy Execution demands clear responsibilities

10 different parties involved Ownership? Collaboration Commitment

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Insight 9: Strategy Execution requires horizontal alignment

Business and support In-depth relationship Speed Timing

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Insight 10: Strategy Execution asks for measurement

Strong & weak points of the current execution process 80/20 rule Keep doing what you do well Long-term perspective Intermediate goals

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Insight 11: Strategy Execution is a resident

Ongoing activity Part of DNA Persistence Discipline

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Insight 12: Strategy Execution needs heroes

Manager = star actor Understanding Commitment New paths


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From PowerPoint to Practice > Heroes

The leadership challenge “Strategy Execution isn’t something others are doing while you are working on something more important.”

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The leadership challenge “Strategy Execution isn’t something others are doing while you are working on something more important.” “Your Strategy Execution role is part of your overall leadership role.”

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The leadership challenge “Strategy Execution isn’t something others are doing while you are working on something more important.” “Your Strategy Execution role is part of your overall leadership role.” “A good leader is a strategist as well as an implementer. It’s not a question of either/or.”

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The leadership challenge “Strategy Execution isn’t something others are doing while you are working on something more important.” “Your Strategy Execution role is part of your overall leadership role.” “A good leader is a strategist as well as an implementer. It’s not a question of either/or.” “Most managers find it easier to define a new strategy than it is to implement the existing one.”

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“Execution is part of your management job. It may sound boring, but nevertheless it is your job.”

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“Execution is part of your management job. It may sound boring, but nevertheless it is your job.” “Don’t mix execution with operations/tactics.”

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Agenda

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Questions & Answers

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From PowerPoint to Practice > Barometer

The Strategy Execution Barometer®: actionable, fact-based Strategy Execution benchmarking data

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The Strategy Execution Barometer®: participants

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The strategy Execution Barometer® looks at Strategy Execution from eight different perspectives I.

VIII.

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Strategy Focus

Support for Managers

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Strategy Execution

Performance-Related Pay

Engaged People and Performance-Driven Culture

Strategy Communication

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Initiative Management

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IV. V.

Skilled Managers

Individual Objective Setting

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Initiative Management and Strategy Communication rank at the bottom when comparing all eight perspectives V. Skilled Managers VI. Engaged People and Performance-Driven Culture I. Strategy Focus IV. Individual Objective Setting VIII. Support for Managers VII. Performance-Related Pay

II. Strategy Communication III. Initiative Management


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Three striking conclusions on the biggest challenge, Initiative Management

Strategic initiatives are poorly staffed and inadequately budgeted for Only 61 percent believe that initiatives are adequately budgeted and staffed. Only 6 to 8 percent of respondents are happy with resource allocation

Strategic projects lack transparent accountabilities 26 percent have no clue who is responsible for several strategic projects Only 21 percent find the project accountabilities transparent

There is often a mismatch between the project portfolio and the overall strategy 21 percent of all projects fail to support the strategy Only 15 percent is convinced that all projects are aligned with the strategy


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Three striking conclusions on Strategy Communication, the second priority

Senior management is ignorant of managers‟ understanding of the strategy 33 percent of participating managers are never actually asked the question Measurement of strategy understanding receives the worst scores of all communication elements surveyed

Managers lack information on their colleagues‟ goals Just 17 percent are happy with the strategy intelligence received from colleagues And 24 percent don‟t receive anything at all

Managers lack a clear view of the overall Strategy Execution process Just 66 percent indicate that they receive information on the Strategy Execution process Of all the 15 elements that determine the quality of the strategy communication, this one scores poorly and ends up in 14th place


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From PowerPoint to Practice > Q&A

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From PowerPoint to Practice > Takeway

Performance takeaways for this evening

1. Sound Strategy Execution creates competitive advantage 2. Most companies loose 40 to 60% of their strategic potential

3. You need to know exactly where you loose performance 4. Use the concept of the 8 to link individual and organisational performance 5. Remember the managers‟ crucial role to get it done 6. Take on the challenge and be a hero!

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Seminar Notes

Strategy Execution: From Powerpoint to Practice Seminar Ekonomika Alumni KULeuven | 03.12.2009 | Jeroen De Flander

From PowerPoint to Practice > Notes

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The 8 1. Review and update your strategy Your strategy is the long-term action plan designed to achieve your vision. Depending on the industry you are in, it maps the road your company should take for the next three-to-10 years. It's designed to help you gain the competitive advantage over your industry peers. On a regular basis, usually annually, a company needs (and wants) to update its strategy based on changes in its competitive environment and on the Strategy Execution feedback from the previous cycle. The execution framework includes strategy updates as they take place on a regular, recurring basis at all levels of the organisation. It excludes the real strategy work, conducted only once every three-to-five years at the top of an organisation. 2. Communicate As soon as your strategy (or strategy update) is finalised and approved by all stakeholders, you should focus on strategy communication. Transparent and easy-to-understand communication creates the necessary understanding and engagement for the new, adapted strategy. It is essential to use all available communication platforms. One big strategy event and a single strategy email are not nearly enough. Use other meeting platforms, discussion groups, informal and formal encounters, performance management sessions, intranets, websites, screensavers, coffee rooms, noticeboards etc. to communicate the strategy. You cannot over-communicate your vision and strategy! Pay attention to the quality of your strategy communication. Senior managers as strategy ambassadors, in particular, should be especially careful about how they communicate. In addition to the content itself, tone of voice and presentation skills are essential elements in transferring content and creating the necessary enthusiasm for others to pass on the message. Make sure you don't kill your strategy with poor-quality, uninspiring communication.


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The 8 3. Cascade When you cascade your company's strategy, you break down the objectives into smaller chunks for the next organisational level. The process stops at the smallest unit level - often teams. In the end, the size of your organisation will define the size of the cascade. It is crucial to achieve macro alignment between all the objectives - horizontally and vertically - in your organisation. You can achieve better alignment by aiming for MECE - Mutually Exclusive and Collectively Exhaustive. This simply means that everything from the level below (strategy, initiatives, objectives, etc.) should add up exactly to the level above, without any overlaps. This may sound logical and easy, but practice shows that many companies have a difficult time linking levels correctly. Important Comment. One of the reasons companies find it hard to get the macro alignment right is the complex matrix of responsibilities. Strategy Execution accountabilities are often blurred and spread across an organisation. In large organisations, you can have up to 10 different parties involved, including corporate functions, functional lines, regional structures and countries. In addition, within each of these structures, responsibilities are often dispersed among human resources, finance, the strategy department and the various leadership teams. When your macro alignment doesn't seem to be working, start by taking a look at the complexity of the Strategy Execution accountabilities and reduce where possible. On a micro level, you need to balance your objectives across perspectives. The four traditional perspectives are: financial, customer, internal processes and people. But you can always add other dimensions as appropriate. The Balanced Scorecard is the best-known method. In addition to the balancing act on the macro and micro levels, you need to select the right indicators - often called Key Performance Indicators or KPIs - to track the objectives and define appropriate targets.


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The 8 4. Compare and learn Your strategy is a hypothesis. It's your best estimate of the route to success… but it's still an estimation. It's crucial to take some time at the end of a cycle to go back and check your hypothesis, to compare your initial strategic assumptions with what you have learnt from the reality of the Strategy Execution cycle that is being completed. By doing this, you will put yourself in the forefront - research shows that only 15 percent of companies take this step. But at the same time, make sure that you don't just look at your strategy: study your Strategy Execution capability as well. All too often, we see companies jumping automatically to change their strategy because they did not reach their projected performance. But, upon examination, there is nothing wrong with their strategy. The problem is the execution. So don't forget to challenge your implementation capabilities as well! This 'compare and learn' step will help you verify your hypothesis (read 'review your strategy'), update your strategy, and fine-tune your execution efforts and capabilities accordingly. 5. Manage initiatives Initiative management is the activity in which your dreams run up against reality, where your strategy meets operations and where resources are added to the strategy formula. It's one of the most difficult Strategy Execution steps and therefore the spot where implementation often goes wrong. Initiative management is all about selecting, prioritising and executing the right strategic initiatives: those actions that will lead to the realisation of your strategy.


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The 8 6. Set objectives Setting individual objectives is one of the best things you can do to improve performance - yours, your team's or even that of an entire organisation. The positive impact of goal setting is one of the most widely researched and scientifically validated aspects of today's organisational science. Two key researchers of goal setting and task motivation theory are Edwin Locke from the University of Maryland and Gary Latham from Toronto University. Link all individual objectives with the overall strategy. If you don't, you might end up with great individual objectives … but of no use to the organisation! Also, focus on the way you secure agreement on the objectives. It's the quality of the objectives - including the link with the overall company strategy - and the acceptance of these objectives that will make your individual objective setting a success. 7. Monitor and coach Regular coaching motivates people and dramatically increases their chances of success. It also simplifies the final performance evaluation. In fact, regular coaching is far more important than the formal review meeting somewhere around the middle of the year. Providing feedback in the right way - a key coaching skill - is a crucial step in boosting performance. Performance coaching is a relatively new, but rapidly growing, knowledge field. The leading authority is Sir John Whitmore, author of Coaching for Performance.


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The 8 8. Evaluate performance Most organisations conduct a formal performance evaluation at the end of the individual performance management cycle. Ideally, the evaluation should answer the question: 'Are the individual performance objectives achieved?'. Be sure you make an honest assessment. Several techniques can help you. Although it's important to link performance to remuneration, performance evaluation should be a separate process.


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12 insights from the best-in-class 1. Strategy Execution is a discipline of its own. Making strategy work isn't the same as strategy making. It's a different game with its own rules, potential pitfalls and best practices. Four important differentiators are: - It involves everyone. From the CEO to the blue-collar worker, everyone is involved in executing the strategy. Their roles might be different, but all individuals contribute to the organisation's execution effort. - It takes much longer. You can build a strategy in a few weeks (or months at the most) but the execution can take several years. It's a sprint versus a marathon. - It demands short- and long-term thinking. While executing, you need to manage your long-term implementation plan and worry about the nitty-gritty actions you will take tomorrow. -It requires a specific skill set. A different game demands different skills. The most important strategy skill by far is analytical thinking, whereas executioners particularly benefit from strong objective setting and people skills such as communication and coaching. 2. Strategy Execution is a vast area with blurred borders. It includes several processes - from budgeting to evaluating individual objectives, and involves all functional domains. 3. Strategy Execution is on its way to maturity. Robert Kaplan and David Norton started a new management revolution in 1992 with the introduction of their Balanced Scorecard concept. Originally launched as a new way of measuring strategy, taking into account other measures rather than merely the financial ones, the Balanced Scorecard quickly became the instrument that made managers think harder about the implementation of their strategy. And today, more than a decade later, Strategy Execution has grown out of its infancy and is on its way to maturity.


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12 insights from the best-in-class 4. Great Strategy Execution requires a great strategy. Even if Strategy Execution differs greatly from strategy building, it cannot exist without it. In fact, a great execution can never compensate for a poor strategy. 5. Strategy Execution requires your attention from the start. And the start is the strategy formulation phase. Execution isn't something you worry about after you have already finished crafting your strategy. You need to think about the implementation challenges at the same time you design your strategy. Here's an overview of the five most important implementation hazards to think about while developing your strategy. To give you a head start, I have included for each one, the key question(s) to ask during the strategy design phase: - The existing culture. Strategies that demand a large cultural shift are doomed to failure as cultural change is very hard to accomplish. Ask yourself: 'How big is the culture change needed in order to execute the new strategy?' and 'Is the required change realistic?'. - The existing power structures. Each organisation has its own power structures, invisible at the surface and part of the 'unwritten rules' within the organisation. But they do exist. And they will influence your execution capabilities. Pose the following questions: 'What are the current power structures in our organisation?' and 'How will they impact the implementation of the strategy we are developing?'. - The ability to change. Each strategy will demand a change effort. And I can tell you the effort is always bigger than you anticipate at the start. Ask yourself: 'How much change can our organisation handle?'. - The maturity of the execution process. Once finished, the strategy will use the existing execution processes in your organisation. Upgrading is possible but takes time. So ask yourself: 'What's the current maturity of our execution capabilities?', 'Is there a need to upgrade?' and 'How long will the upgrade realistically take to accomplish?'. - The maturity of the Strategy Execution skills. Related to previous. Processes need skilled people to operate them. The questions to ask: 'What's the current maturity of the manager's execution skills?', 'Is there a need to upgrade?' and 'How long will the upgrade realistically take to accomplish?'


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12 insights from the best-in-class 6. Strategy Execution has a strong timing sequence. You don't do everything at the same time. One thing happens before the other, and the order is important. 7. Strategy Execution requests a seamless integration between organisational and individual performance. You can look at performance from either an organisational or an individual perspective. But in order to realise your strategy, a connection between both is crucial. Most will agree with this statement, but few will actually make it happen. 8. Strategy Execution demands clear responsibilities. Strategy Execution takes place across different organisational levels. Depending on the size of the company, these include the overall company level, one or more intermediate levels - usually called division, department or team - and the individual level. In large organisations, you can have up to 10 different parties involved, including corporate functions, functional lines, regional structures and countries. In addition, within each of these structures, responsibilities are often dispersed among the departments of human resources, finance and strategy and the various leadership teams. Pretty easy to lose some of your strategy in this structure, wouldn't you say? So in order to make it work, you need to define clear responsibilities for all parties involved. 9. Strategy Execution requires horizontal alignment. Building on the previous point, I'd like to stress the importance of a strong horizontal collaboration between business and support departments. Their relationship should go beyond the annual budget and monthly operational meetings.


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12 insights from the best-in-class 10. Strategy Execution asks for measurement. In many organisations, Strategy Execution is still a black box. You throw your strategy in one end and performance comes out the other end. But nobody really knows what did the trick. It's impossible to say what worked and what didn't. Even worse, companies change things for the worse because they don't know the key elements of their execution success. So, as with all other business activities, organisations need to measure their performance. It's time to open the implementation box and see what's inside. Here's how: - Find the strong and weak points of your execution process. If possible, compare them against your competitors. Evaluate the complete process or zoom in on one or two steps. Do the exercise for the organisation, one or more divisions, or start with only a small team. - Once you have gained these insights, focus your energy on those things that matter most for the organisation. In other words, set priorities. - Don't forget to keep doing what you do well. Once you've identified your strong points, make sure you keep them best-in-class. - Have a long-term perspective. It takes time to build capabilities. Small organisations should count on 18 months to become best-inclass. For a large multinational, it can take up to three years to get there. Your measurement approach should take the long-term into account. - Set intermediate goals and measure your progress. While you do want a long-term measurement perspective, you also want to define and track intermediate targets. 11. Strategy Execution is a resident. Constantly changing environments, customers, competitors and employees require Strategy Execution to be an ongoing process, institutionalised within the organisation: a permanent activity - part of the organisation's culture and DNA - that is driven with persistence and discipline.


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12 insights from the best-in-class 12. Strategy Execution needs heroes. Managers are the most important players in the execution contest. In fact, strategy remains a paper exercise without managers taking the right actions and fulfilling their roles. They contribute content, are the links between organisational levels, and act as performance role models. And this requires the right attitude. Execution isn't something others should worry about. Each manager should: - Acknowledge the importance of Strategy Execution. - Understand what Strategy Execution is all about. - See execution as an essential part of being a leader. - Know how to maximise their crucial role in the whole process. - Develop the necessary Strategy Execution skills. On top of that, senior managers need to put the necessary processes in place to ensure that all managers in the organisation become execution heroes. This is a challenge in itself.

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